HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Hutchison China MediTech Ltd / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hutchison-china-meditech-ltd-7c2c4b58-ca71-4ac4-befb-345e8d0f10ca" target="_blank" data-smartkarma-citation="entities:27342:1" rel="noopener">Hutchison China MediTech Ltd (HCM US)</a> (Hutchmed) didn’t perform well. Its cash holdings could last about two and a half years considering the cash burn rate.</li>
<li>Hutchmed’s three major commercialized products would all face different challenges. Feedbacks from FDA/MAA cast a shadow on the Company's internationalization prospects. </li>
<li>According to the current speed of pharmaceutical innovation, Hutchmed’s R&amp;D efficiency/productivity is not satisfactory. The current pipeline does not have core competitiveness. Bearish on outlook.</li>
</ul>



Hutchison China MediTech Ltd (HCM US) (Hutchmed) didn’t perform well. Its cash holdings could last about two and a half years considering the cash burn rate.
Hutchmed’s three major commercialized products would all face different challenges. Feedbacks from FDA/MAA cast a shadow on the Company's internationalization prospects. 
According to the current speed of pharmaceutical innovation, Hutchmed’s R&amp;D efficiency/productivity is not satisfactory. The current pipeline does not have core competitiveness. Bearish on outlook.


Hutchison China MediTech (HCM.US/13.HK) - The Pain Points Become More Pronounced

Thematic (Sector/Industry)

<ul>
<li>The State Council decided to support renovation of medical equipment with special refinancing/financial interest subsidy, which has promoting effect in short-term. Investors are advised to look at it dialectically. </li>
<li>The draft for comments on the centralized procurement of liver function biochemical reagents led by Jiangxi was released. The rules are better than the market expected.</li>
<li>We saw some new changes in VBP. For investors, since VBP is inevitable, it is better to accept it - There are still good opportunities in some cases.</li>
</ul>


The State Council decided to support renovation of medical equipment with special refinancing/financial interest subsidy, which has promoting effect in short-term. Investors are advised to look at it dialectically. 
The draft for comments on the centralized procurement of liver function biochemical reagents led by Jiangxi was released. The rules are better than the market expected.
We saw some new changes in VBP. For investors, since VBP is inevitable, it is better to accept it - There are still good opportunities in some cases.


China Healthcare Weekly (Oct.14) - State Finance Discount for Medical Device; IVD VBP; VBP Changes

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Sep 30th.</li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight short changes in CSPC Pharma, Hygeia, GCL Technology, SHK Properties, Techtronic.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Sep 30th.
Top short increases and decreases were tabulated for one week and four week period. 
We highlight short changes in CSPC Pharma, Hygeia, GCL Technology, SHK Properties, Techtronic.


HK Short Interest Weekly: CSPC Pharma, Hygeia, GCL Technology, SHK Properties, Techtronic

Simcere Pharmaceutical Group / Equity Bottom-Up

<ul>
<li>Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. </li>
<li>The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.</li>
<li>In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.</li>
</ul>


Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. 
The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.
In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.


Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The inclusion of <a href="https://www.smartkarma.com/entities/china-shenhua-energy-co-h" target="_blank" data-smartkarma-citation="entities:382:1" rel="noopener">China Shenhua Energy Co H (1088 HK)</a>, <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a>, <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> and <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a> takes us to 73 index constituents.</li>
<li>Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover of 5.09% and will result in a one-way trade of HK$10,562m.</li>
<li>There are large shorts on <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> and <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> and there could be some short covering from now to implementation.</li>
</ul>


The inclusion of China Shenhua Energy Co H (1088 HK), Chow Tai Fook Jewellery (1929 HK), Hansoh Pharmaceutical (3692 HK) and Baidu (9888 HK) takes us to 73 index constituents.
Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover of 5.09% and will result in a one-way trade of HK$10,562m.
There are large shorts on Chow Tai Fook Jewellery (1929 HK) and Hansoh Pharmaceutical (3692 HK) and there could be some short covering from now to implementation.


HSI Index Rebalance: Another Small Step Towards 80 Members, But BIG Impact

China

CSPC Pharmaceutical Group Limited, through its subsidiaries, manufactures and sells pharmaceutical products.  The Company's products include vitamin C, antibiotics and common generic drugs. The Company is also engages in the development of innovative drugs and antibiotics.

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CSPC Pharmaceutical Group (1093 HK)

Hutchison China MediTech (HCM.US/13.HK) - The Pain Points Become More Pronounced

Hutchmed's position in the industry isn't in the first echelon. Its commercialized products face different challenges, with...

Xinyao (Criss) Wang

China Healthcare Weekly (Oct.14) - State Finance Discount for Medical Device; IVD VBP; VBP Changes

The State's finance discount plan for medical device has positive effect. Investors need to view it dialectically; Rule of IVD VBP led by Jiangxi...

Xinyao (Criss) Wang

HK Short Interest Weekly: CSPC Pharma, Hygeia, GCL Technology, SHK Properties, Techtronic

We analyzed the latest HK SFC report for aggregate short position and highlight short interest changes in CSPC Pharma, Hygeia, GCL Technology, SHK...

Ke Yan, CFA, FRM

Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

Simcere’s profit was driven by investment business, which will further decline due to unfriendly macro. The pipeline quality is not high, leading...

Xinyao (Criss) Wang

HSI Index Rebalance: Another Small Step Towards 80 Members, But BIG Impact

There are 4 adds to the index in September - China Shenhua, Chow Tai Fook, Baidu & Hansoh Pharma. There will be big impact on some of the stocks...

Brian Freitas

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